5 Local media online|
219. The biggest change to the local and national
media landscape over the past two decades is the emergence of
new technology. There is now much more choice for people using
media - whether it is audio, video or text - as digital technologies
and the internet offer alternatives to traditional media platforms.
The impact of the new digital age was summed up by Lord Carter
in the introduction of the final Digital Britain report:
On 26 August 1768, when Captain James Cook set
sail for Australia, it took 2 years and 320 days before he returned
to describe what he found there.
Yesterday, on 15 June 2009, 20 hours of new content
were posted on YouTube every minute, 494 exabytes of information
were transferred seamlessly across the globe, over 2.6 billion
mobile minutes were exchanged across Europe, and millions of enquiries
were made using a Google algorithm.
220. The digital world is a global one yet the impact
it has had on local media is significant. The whole premise of
the Government's Digital Britain review and subsequent
Digital Economy Bill is to make sure the UK media industries and
their regulators are equipped to deal with, and can maximise the
benefits of, the new digital era.
221. The local media organisations that operate on
traditional platforms argue that the increased competition for
people's media consumption and advertising revenues, as well as
issues such as the exploitation by search engines of the media's
content, has effectively caused a crisis in traditional local
media. We have also heard evidence that the internet offers a
new platform and a degree of localness not available from traditional
media, including interactive 'hyper-local' services. Although
the recession has affected advertising revenues on the internet,
it would appear that the impact was nowhere near as serious as
it was for print media.
The impact of technology on the
local media landscape
222. Internet technology is now a regular feature
of most domestic, educational and work environments. Recent Ofcom
research showed that 77% of the UK adult population owned a home
computer and 73% of the population had access to the internet
either at home or elsewhere. The same research showed that 70%
of UK adults accessed the internet every day, and in the 15-44
age group that figure roses to 78%.
223. In evidence to our inquiry, Ofcom noted that
while regional television news viewers and local newspaper readership
were skewed towards older age groups, the young were leading the
take-up of local media online. Ofcom also suggested that growth
in internet use as people's main source of local news had, to
some extent, been at the expense of other media, with one-quarter
of those accessing local newspaper websites saying that they did
so instead of reading the hard copy.
Ofcom also reported that the proportion of adults citing television
as their main source of local news had remained stable since 2002,
at around half of all adults. In contrast, 32% said local newspapers
were their main source of local news in 2002, by 2008 this had
fallen to 23%.
224. The implications of the changes in consumer
behaviour have been noted by Rupert Murdoch, who in a recent interview
I can see the day, maybe 20 years away, where
you don't actually have paper and ink and printing presses. I
think it will take a long time and I think it's a generational
thing that is happening. But there's no doubt that younger people
are not picking up the traditional newspapers.
225. It is unlikely that in 20 years there will be
no hard-copy newspapers, but Rupert Murdoch's point is a pertinent
one. It is not just that young people are not reading traditional
print newspapers but that there is also increased competition
for their readership from non-newspaper internet blogs, wikis
and forums as well as a growing number of hyper-local news initiatives
that are providing local news and interactive features on community
226. There are large global, media organisations
who are also venturing into local media. Google has become a household
name for its search engine, but we have heard some criticisms
of its news aggregation service, Google News, which newspaper
groups claim has exploited local media content and diverted advertising
revenue and readers away from local newspapers.
Google and online advertising
227. Google News is an automated news aggregator
provided by Google Inc. launched in 2002, currently providing
information from more than 4,500 news sources. In 2006 an archive
was added to include articles from the past 100 years, as well
as a mobile version of the product. Google News provides, on its
front page, a summary of top news stories from various sources,
followed by summaries of news stories for various categories (business,
entertainment, sport etc); or specific search terms and filters,
including your local town, which can be entered. This means that
the user can call up a digest of news stories for their local
area, with links to the originating source - often the website
of a local newspaper.
228. News aggregation, and specifically Google News,
has attracted considerable criticism from local media groups.
The Chief Executive of Trinity Mirror, Sly Bailey, referred to
"the super dominant position of Google and Google News,"
and told us that "they [Google] do not spend a penny on any
kind of journalism at all and yet they are making money out of
Carolyn McCall from Guardian Media Group referred to it as a "no-win"
situation, with newspapers unable to remove their content from
Google as this would be even more damaging to their businesses.
229. The notion that Google is profiting from third
party content, in which it does not invest, is very much the theme
of the criticisms we have heard about Google News. The Newspaper
Society told us:
[the industry] has suggested that the Government
should urgently explore in consultation with publishers effective
ways in which Google and others should be prevented from profiting
from third party content, without recompense to, or the consent
from, the media companies who generated the material upon which
they have built their businesses.
230. The NUJ put forward a similar argument:
The problem is that Google itself doesn't actually
produce any content - it just lives off the work of others, and
that has to be paid for. However given that there are fewer adverts
for content producers to fight over then there is less money to
pay creators and so media companies axe journalists, photographers
231. In response to these criticisms Matt Brittin,
Managing Director of Google UK, told us that he refuted any allegations
that Google or Google News stole content:
We do not steal content. If you look at Google
Search and Google News what you will find is what we call snippets
- little line and a link that will take you through to the originator's
website. That is accepted as being in line with copyright law
worldwide. It is seen in the same way as a newspaper article quoting
lines from a book in a book review. That is the kind of use of
copyright content that we make, so we absolutely fiercely defend
copyright owners' rights and it is wrong to paint us as stealing
232. He also stated that he thought Google News could
actually assist local newspapers by helping people find local
news content online and by directing searchers to local newspaper
websites. Mr Brittin
described Google as a "virtual newsagent"
that could offer online distribution for news content and, he
said, unlike actual newsagents Google did not charge news providers
for the service.
233. Mr Brittin also highlighted some of Google's
innovations that could enhance the online presence of local newspapers.
Firstly, the "Ads by Google" service where Google could
facilitate targeted advertising for other websites and where most
of the revenue goes to the publishers of the original story. Secondly
the new "Fast Flip" service, currently being piloted
in America, which would allow readers to flick through the pages
of an online newspaper to find the content that they wanted to
read. Mr Brittin
also stressed that although Google web search carried targeted
advertising, Google News did not, in fact, carry advertising at
all. He told us that news content was not particularly attractive
to advertisers, because it was often covering tragic or unpleasant
events that advertisers did not want to associate their brand
with, and also that people searching the web for news were not
usually doing so in order to make a purchase:
News queries typically are not queries where
advertisers want to appear and do not have a commercial intent
behind them, so, as I say, if you are searching for 'bomb in Baghdad'
it is unlikely that you are looking to make some kind of acquisition
in relation to that query and therefore there is no market to
cover there. 
234. What seemed to add to the frustrations of the
local media groups was their claimed inability to get together
as news publishers and discuss the collective complaints they
had about Google News with Google. This was described to us by
Carolyn McCall of Guardian Media Group:
At the moment, because of the competition law,
because of collusion, we as publishers cannot sit down in a room
together and talk about the issue of aggregators. We cannot sit
down and say, 'What can we do about this? Can we go together to
Google?' We would be in collusion so therefore as individual players
we have to think about this or come to select committees like
this and say, 'This is a really big issue.' We cannot sit in a
room, even with lawyers, and do this because it would be deemed
235. On 1 December 2009, Google announced changes
which would allow publishers to set a limit on the number of free
articles readers could access through Google News and websites
indexed in Google Web Search. This has been reported as "a
reaction to concerns in the newspaper industry that Google is
using newspaper content unfairly."
These changes mean that users who click on more than five articles
in a day may be routed to the payment or registration pages of
the originating website. This could solve the problem whereby
users clicking on links from Google News are taken straight to
news articles, bypassing some sites' subscription systems. However,
there is still concern amongst the industry that users of Google
News may not click through to the originating website at all,
but instead just read the aggregated 'snippets' that appear on
the return of the search results.
236. We acknowledge the concerns local newspaper
publishers have about news aggregation. At a time when there are
such significant changes in the way that people consume their
news, user-friendly mechanisms that offer consumers the ability
to scan headlines from, and click through to, a vast range of
alternative news sources must appear to be a targeted threat to
the traditional media formats.
237. We are concerned at local newspaper groups'
claims that they are unable to undertake any collective industry
discussions about the issues raised by aggregators without it
breaching competition law. We recommend that this apparent restriction
be considered by the Office of Fair Trading and that guidance
is given, as appropriate, on the extent to which such discussions
can be held without being deemed anti-competitive.
238. We welcome Google's recent changes to Google
News and Google Web Search regarding the number of articles which
can be freely accessed on sites requiring subscription or registration.
While Google's success in news aggregation has been achieved through
innovation rather than aggression and is not in breach of international
copyright laws, its changes demonstrate a welcome awareness of
the problems faced by local newspapers and other traditional publishers.
It seems clear that Google's business is having a significant
impact on traditional publishers' economic models and so we welcome
new facilities such as Fast Flip and hope Google is sensitive
to the need to maintain diverse, pluralistic sources of local
news and information.
239. The wider criticism we have heard about Google
is the dominance of its position in online web searching and advertising,
particularly in light of the growth of advertising revenues in
the online world and the level of migration from traditional media.
Enders Analysis told us that Google Inc's net profits had increased
by over 2,000% since 2003, and that 97% of Google's total revenue
comes from advertising.
240. Newspaper publishers are critical of Google's
use of targeted advertising on its search engine. As Trinity Mirror
[Google] use a targeted advertising model to
poach large and small advertisers from regional newspapers across
all of these advertising categories. In the past, only regional
newspapers and directories such as Yellow Pages were able to match
local advertisers with local audiences: now we compete with Google
whose very business model is based on this kind of targeting.
Search advertising was estimated by Enders to be worth around
£2 billion in 2008, compared to £2.3billion for regional
newspaper advertising, and is expected to grow by 4.5% in 2009.
241. Matt Brittin refuted these allegations, and
said that to accuse Google of "poaching" advertisers
suggested there was some sort of ownership over them, which was
not the case.
242. Local media companies have told us that the
strong position of Google, not just over traditional forms of
media but also its dominance over other search engines, makes
competition very difficult.
We asked the OFT whether it was concerned about the strength of
Google. John Fingleton, OFT Chief Executive, told us:
We certainly are aware of the size and impact
of Google. The complaints that have come to us thus far about
Google have been competitor complaints, competitors who are not
pleased with the fact that Google makes a better offering to their
customers. That type of concern in principle is not something
that would precipitate an investigation by us.
243. Mr Fingleton also explained that Google operated
in a global market and it was unlikely that any competition issues
would arise in the UK that were not replicated elsewhere in the
world, and that this has not happened.
With respect to the specific issue of Google's online advertising
revenue, Mr Fingleton said:
If a significant share of expenditure goes on
one company and that company previously inherited that position
from state ownership or from some feature of the market that means
that consumers cannot switch, we would be concerned. Where a company
achieves that position through superior innovation, foresight
or better targeting of its customers we would be very wary about
244. We agree with the Office of Fair Trading's
assessment of Google's position in the media landscape: Google
has achieved its dominant status from successful innovation and
investment in online technologies and services which has provided
significant consumer benefits.
245. Local newspaper publishers have been very
critical of Google, yet their criticisms have, in our view, lacked
focus. Newspapers can opt out of Google News and Web Search, and
Google has made attempts to work with newspaper publishers by
facilitating the advertising for their websites, which we welcome.
We recognise that the changes being brought in the online world
are creating huge disruption to the traditional business models
of local newspapers and other media companies, resulting in both
threats and opportunities. Where there are clear problems that
can be addressed by public policy changes and regulatory intervention,
we can recommend that action be taken. However we have not heard
any evidence that suggests this is the case with the complaints
from newspaper publishers about Google.
The future for local and regional
246. Throughout this Report we have described the
pressures on local media groups in the digital age. The challenges
posed by the growth and development of digital media are possibly
the biggest the industry has ever faced. How traditional print
media competes with and utilises the internet is going to be the
key to its sustainability in the digital age. The growth in the
use of the internet at work, home and in education will not be
reversed and internet technologies look set to keep innovating
with more products becoming available to make access to the internet
faster and more portable.
247. As already discussed in paragraph 224, Rupert
Murdoch, who owns one of the largest media groups in the world,
News Corp, has said that he does not think that newspapers will
exist in hardcopy at some point in the future, perhaps in 20 years
time. Last year
News Corp announced that it would be introducing a "pay-wall"
to the online versions of all of its newspapers, which would require
readers to subscribe in order to read the full contents of stories.
248. The introduction of paid content by such a major
publisher could be a significant event in terms of the future
of local, as well as national, media. Currently, internet users
generally expect to navigate their way around the internet and
consume information without charge. If pay models were to be proved
successful and widely adopted, this could change the economics
of the provision of online news content.
249. However, Paul Bradshaw, Professor of Online
Journalism at Birmingham City University, said he was sceptical
about the success of paid content online. He told us:
If you look at previous experiments with pay-walls,
typically traffic to a website will drop between 60 and 90%, so
you lose an enormous proportion of your readers. Whether or not
you can make that up, you are going to be able sell advertising
for more per reader because you know more about those readers
because they are more loyal readers and so on, so they are more
valuable to advertise to, but if there is enough of them to make
up for that and if they paying enough to make up for that - again
the evidence suggests that people are not particularly willing
to pay for them -then I do not think it is going to work unless
they look at the package they are selling.
[...]people never bought news, they bought a
newspaper which was a package which had certain functions: it
was portable, it was high resolution, it was serendipitous. Online
they are not selling any kind of package that I can see and if
you look again at successful business models online, it is about
250. The creation of new, innovative web models by
local newspaper publishers that would attract users and be profitable
would require significant investment by local media groups in
online technology, and we have heard that advertisers can be reluctant
to place their products around news content. However, with the
introduction of IFNCs, and potentially more pay-walls being put
up by global and national companies, there could be options for
local newspaper publishers to become profitable multi-platform
operators. The Press Association has however drawn our attention
to the impact of structural change on journalism, and the need
for "major re-skilling of regional and local print journalists
to give them the skills to operate in multi-platform businesses"
which would create additional costs.
251. The benefits of online technologies for consumers
are considerable, and the appeal of the internet for advertisers
is only likely to increase. The competition for readers and advertising
revenues on the internet is fierce given the lower costs of entry
into the online world, compared with entry into print media.
252. However there are encouraging developments
that could help local news publishers to become multi-platform
news providers. IFNCs could offer a shared skill and resource
base that would help local newspapers make the transition to becoming
online publishers as well as print publishers. We also note that
some publishers are experimenting with different business models
for the provision of online content.
Hyper-local websites and blogs
253. In recent years there has been a growth in the
number of hyper-local websites and blogs dedicated to local and
community issues that are often interactive, in some way, with
their audience. The relatively small start-up and maintenance
costs of web-based projects such as hyper-local websites and blogs,
as opposed to the heavy costs of print and distribution, mean
that there is a smaller risk in setting them up, but also a smaller
financial return. The use of volunteers and 'crowd-sourcing (where
a question is put to the readership who can then all offer contributions
to the answer), also means that content itself can be produced
254. Paul Bradshaw described to us how these initiatives
have been established in the local media landscape:
Already you are getting a very significant, what
you might call, hyper-local movement of publishers who are passionate
about their local area and particularly frustrated by the lack
of coverage that they do get in the local press because the local
press has got such an enormous patch to cover and, if you like,
a commodified approach to news, but they are trying to plug the
gaps they see local newspapers leaving behind them as they cut
255. Mr Bradshaw went on to say that there was also
scope for hyper-local websites to cover local democracy and the
"bread and butter"
material traditionally covered by local newspapers, as newspapers
have increasingly found this coverage expensive and "not
particularly editorially attractive"
whereas a hyper-local website would have fewer costs and overheads
and could explicitly seek to cover local activities.
256. There are, however, issues about the quality
and the regulation of the hyper-local movement. Claire Enders
told us she did not believe that bloggers could ever take the
place of traditional journalism:
It is not really possible to replace professional
journalism which has been honed and trained. The people who work
in the press are highly trained individuals; otherwise they would
not still be there. You have to be able to do stories very quickly,
you have to have an inquiring mind. [...] We are a very literate
nation, so it is a calling that has attracted many very fine people.
Those people may well, as indeed they already do, engage in blogging
but they are going to have to make a living during the day, whatever
it is ie washing cars or whatever - and they will not be able
to spend the time or be paid to spend the time to investigate
local politics, or local issues which are of extraordinary interest.
257. In response to these concerns about the editorial
control of blogs, Paul Bradshaw told us that in fact hyper-local
bloggers could offer a level of transparency that you did not
get with traditional journalism, as well as an interactivity with
the readership which can act as a quality control:
For the hyper-local publishers, bloggers, one
key element of quality is transparency. If you report on a council
meeting, then you link to the full minutes, you put all of that
in its full form. It is interesting because I have been looking
at a lot of council coverage in local newspapers and it is very
much second and third-hand, you are getting very small quotes
and it is not clear if that is from a press release, directly
from a phone call or the meeting. A blogger would link to as much
as possible and would link to the full transcript. The other,
if you like, quality mark is right of reply. One of the cultures
of blogging is around providing an opportunity for people to put
their points of view across, correct things and update things
whereas in print once a deadline has passed, that is it, you forget
258. If hyper-local websites become more widespread
there is the question of who should regulate their content. Ofcom
has told us it does not think that it should regulate blogs.
The Chairman of the Press Complaints Commission, Baroness Buscombe,
has also said that any regulation of bloggers should not be statutory
and should be done by consent.
Bloggers can currently join the PCC voluntarily, although there
is a subscription cost which is calculated by circulation, which
in terms of blogs is problematic to calculate and potentially
This falls into a wider debate about the regulation of online
content, and is not the focus of our current inquiry, but it does
indicate a potential scrutiny gap.
259. There is also the question of whether such services
can be economically viable. As we have discussed, hyper-local
sites and blogs are relatively low cost to run, but revenues and
profitability are potentially lower. We asked Paul Bradshaw if
he thought there was a economically sustainable model for hyper-local
news and he told us there were a number of models that offer viability
for these types of website:
One of those is a franchise model, strangely.
There is an organisation called 'AboutMyArea' which effectively
sells the ability to report on a particular postcode and that
is their business model. I am not sure how long-term sustainable
that is, but that is one model. Another model is consultancy effectively
and that seems to be the model of Talk About Local, a network
of hyperlocal blogs [...]. The blog itself might not make any
money, but the people who are operating those sell their services
elsewhere and effectively that blog demonstrates their abilities.
Then the third model is the traditional advertising model and
the key thing here is, as Ed Roussel himself from The Telegraph
put it very succinctly a couple of weeks ago when I was down:
'Print publishing and broadcast publishing have high costs of
entry and high margins; online publishing has low costs of entry
and quite often low margins', unless you are someone like Google.
For those bloggers the margins they can get are fine, they are
sustainable and they can live on advertising, for example.
260. He also said that he hoped that local newspapers
would engage with these hyper-local start-ups, thereby improving
He argued that if local newspapers left the bigger stories to
news agencies and the BBC, they could focus solely on local investigative
journalism in conjunction with hyper-local websites.
261. Hyper-local blogs and websites can offer
a valuable service to local communities. Their greatest qualities
are their interactivity with their readership and the exchange
of local information and discussion that they facilitate. At a
time when some local newspapers are struggling to survive, some
local blogs are beginning to fill the gaps that a receding local
press is leaving behind. Hyper-local websites can potentially
also be good for maintaining local identity and can provide healthy
scrutiny and discussion of local democracy and local issues, which
is to be encouraged.
262. Local newspapers can learn from many of these
innovative websites, and in some cases there is an argument that
local newspapers should be working alongside them. However this
is not to say that local newspapers are no longer relevant. There
is still, and will always be, a need for local professional journalism.
Local newspapers will retain a role and a relevance particularly
for the segments of society that do not, or cannot, use the internet.
263. We endorse the sentiment that it is local
journalism, rather than local newspapers, that needs saving. The
two are far from mutually exclusive, but newspapers need to be
innovative in the way they train their journalists to work in
a multi-platform world.
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